The Securities and Exchange Commission (SEC) has penalized two online lending firms for unfair collection tactics and misleading loan terms to protect consumers.

The regulator said Tuesday Link Credit Lending Investors Inc., which operates under the names iPeso and Pesoin, was fined P1 million for engaging in abusive collection practices.

From September 2022 to March 2023, the SEC’s Financing and Lending Companies Department (FinLend) received over 200 complaints against the company, with four forming the basis of the penalty.

Link Credit Lending

FinLend found that Link Credit Lending sent borrowers messages containing insults and threats, including plans to contact their emergency contacts and co-workers over unpaid loans.

“Considering the facts, circumstances and gravity of the offense committed by Link Credit Lending, FinLend finds that the monetary penalty of [P1 million] is proper and precise,” the order dated 18 July read.

The company was also warned that future violations would be met with harsher penalties.

LHL Online Lending

Separately, LHL Online Lending Inc., doing business as Pautang Online and Pautang Peso, was fined P129,000 for violating the Truth in Lending Act, which requires full disclosure of loan terms.

According to a 17 July order, FinLend found the company misled borrowers by listing longer repayment periods in disclosure statements — 150, 180, or 210 days — but requiring repayment over much shorter durations, resulting in unexpected surcharges and interest.

“The intent of the law, which is to ensure that borrowers are well-informed about the agreements they enter into, has been undermined by (LHL Online Lending’s) deceptive practices,” the SEC said.

Borrowers misled

“Worse still, borrowers were misled into agreements through misleading information that made them appear to be wise choices, when in fact, they were not,” it added.

The SEC warned that further violations could lead to LHL Online Lending losing its registration and authority to operate.